Case studies
Property Purchase & Retirement Planning
Business owner Simon came to us for financial planning advice. He was looking to buy his commercial property and simultaneously plan for his own retirement.
Simon is a 46-year-old divorcee. He owns his limited company which has been trading profitably for over 10 years.
Simon owns his main residence, subject to mortgage. He has some modest savings and investments, as well as various pension plans that had been sold to him by different financial salespeople over the years.
Simon’s company owns the property that he trades from. However, there is a £50,000 business loan outstanding from his bank.
Simon was introduced to us by his accountant, who felt that he needed a review of his finances and some advice on retirement planning, seeing as the business was making decent profits.
When we met with Simon, we asked him what his most pressing financial concern was. It transpired that, whilst the business was profitable, he did suffer cash flow pressures on a regular basis. He was keen to explore how he could reduce this.
Simon also wanted to understand whether his existing pension provision was sufficient for his needs and, if not, what level of contribution was needed to achieve his objectives.
We reviewed all of Simon’s pensions, establishing what income they were due to provide and when. We also obtained transfer values for each of the schemes. We discussed Simon’s attitude to investment risk, his experience with investing and his capacity for loss, in order to ensure any recommendations were suitable.
We concluded that Simon should take the following actions:
- Set up a new Small Self-Administered Pension Scheme (SSAS) and transfer his various personal pension plans, totalling £109,000, into the new scheme.
- Use the SSAS to buy the leasehold commercial property from his company.
- Increase pension contributions into the new SSAS based on his target level of retirement income.
Simon’s pension now owns the building that he trades from. Simon is a co-trustee of the fund and therefore has much more control over his pension and how it’s invested.
Simon’s company and a sub-tenant pay rent into the SSAS, which equates to a yield of around 13% per annum.
The bank loan is now re-paid.
Simon’s cash at bank position is much improved. He now has additional liquidity of nearly £60,000 in his business bank account.
In the event of future cashflow pressures, Simon can take a loan from his SSAS pension to assist with business activities.
Simon has a clear investment strategy in place for retirement.
